Special Bonuses Added to Charity Auction of “Lunch with Hunter”

A bunch of “lunches with venture capitalists” are being auctioned off to support Presidio Knolls School in San Francisco. The auction ends this Tuesday, August 27th and great investors such as SV Angel’s David Lee, Greylock’s Josh Elman and Bessemer’s Ethan Kurzweil are participating.

Lunch with me is going for $650 but I want to sweeten the pot and see if we can raise more money for a good cause. So I’m adding two additional prize levels to unlock.

If the bidding hits minimum $750, the winner will get not just lunch but a limited edition “Google Goes Gaga” t-shirt from Lady Gaga’s visit in 2011. These shirts were only available to a portion of in-person Googler attendees. My-my-my-my Poker Face!!!!!

If the bidding hits minimum $1000, you get the lunch, the Gaga shirt and a piece of pre-IPO Google memorabilia: a Google 04 sweatshirt. This is high quality people – the letters are sewn on. At the time there were probably fewer than 1,500 Google employees and these were given out on the January 2004 company ski trip. The trip was only open to west coast Googlers, so maybe only a few hundred of these produced? Who knows!!!!

Remember to BID BEFORE IT’S TOO LATE….

Google Goes GagaGoogle 2004

 

The “Why” of Homebrew

“Why are you creating a VC company?” That was from Cody Brown, founder of Scroll Kit, in response to my post yesterday about the “Why” questions we ask founders when discussing investments. We answer the “Why” for Homebrew on our site, but don’t get into our personal stories. Cody, here’s that part:

My mom’s an artist, dad did business. I spent the earlier part of my life trying to figure out if I was left brain or right brain. It wasn’t until I started to go deep into tech that I realized the answer could be “both.” Then I committed to only work on projects which I wanted on my tombstone. A morbid way of saying that my profession needed to reflect who I was as much as “son,” “friend,” “brother,” “husband” or “father.”

With that in mind I was fortunate to join three great teams at Second Life, Google AdSense and YouTube. With each I was able to be part of a phase that utilized and challenged my abilities. Google’s a great company which treats employees very, very well – it would have been easy to stay there for another 10+ years and be in a position to retire early but I knew that I didn’t want “Google” to be the last project chiseled on my tombstone. Still, it’s hard to leave something you love. And then we had a kid in 2012.

I didn’t know how becoming a father would change my priorities – not that I could ever coast at Google, but it was a place where I’d built up a reputation and knew how to navigate. Perhaps staying there for the rest of my career would become appealing in order to provide stability. The first few months of my daughter’s life were a blur and learning how to become a family was enough to keep my wandering mind occupied. What happened next surprised me.

Instead of believing Google would be best for me, I started to think it was exactly the wrong place. This had nothing to do with Google – as employees, press and the stock market attests, Google has been kicking butt – and everything to do with the type of dad I wanted to become. Being able to teach her the value of chasing her passions, leaning into her fears, trying new things and being entrepreneurial were among my top priorities. How would I do this from Google, where she’d be visiting me in one of many offices, in one of many buildings? Was my message to her “daddy was very lucky to find a great company when it was small and then stayed there for 20 years?”

Eric Schmidt famously counseled Sheryl Sandberg to grab that seat on the rocketship, but I wanted my daughter to learn about building rocketships, not finding her seat. This isn’t meant to demean Eric’s advice. It’s more a personal statement – my father stayed with a big company for 20 years. He taught me many things but entrepreneurial risk-taking wasn’t one of them. I wanted my behavior to match my words.

It was around the same time that Satya and I started devising what became Homebrew. I’m now able to surround my daughter with great entrepreneurs. When she comes to our offices in SOMA I can tell her “this exists because daddy and one of daddy’s friends took a risk.” And since we intend for Homebrew to be around for many years, I’m hoping to convey that lesson to her as a toddler, kid, teen and young adult.

And so I don’t forget, through ups and downs, wins and losses, fund #1 or fund #10, I got a tattoo of the Homebrew logo on my right shoulder. Visually it reminds me of the sun rising over a bridge which leads to new adventures, the unknown. It’s a perpetual beginning. And so when I look at my daughter, when I look at myself or when I look at any member of the Homebrew community, I’m reminded of the Why.

Founders, “Why” Matters as Much as “What” & “How”

tldr: mission-driven founders kick more a$$

As Homebrew ramps up its investing, I’ve been really impressed by the quality of founders we’re seeing raising seed rounds. Although any investor ends up saying “no” 99 out of 100 times, many of the companies that weren’t a great fit for us have gone on to raise strong rounds and I’m sure many will be quite successful. Satya and I enjoy being transparent about our values and happy to iterate in public, so here’s something we believe:

Founders who can answer “Why” have a competitive advantage over those who can’t, and tend to be better fits for Homebrew.

The average pitch contains substantial time dedicated to the “what” and the “how.” What is the market you’re serving? What is the product you’re building? What is the customer pain you’re addressing? How will you build your product? How will you recruit a team? How will you get customers? All of these questions are essential and certainly factor into any investment decision we make.

That said, “what” and “how” haven’t been sufficient to get us to YES. In the handful of investments we’ve made to date and the termsheets we generated this week (it’s been busy), there has consistently been a strong “Why” as well.

Why are you taking years from your life to work on this problem? Why does your company deserve to exist and why is the world a better place when it succeeds? Founders who can answer the “why” are usually called “mission-driven.” It doesn’t mean they’re necessarily curing cancer or solving global warming (although they might be). Rather there’s a deep conviction that they’re on a personal crusade, one which you need to get on board with RIGHT NOW.

Mission-driven founders energize us. Mission-driven founders also have a competitive advantage in the marketplace. We believe they are better recruiters – not just warm bodies, but the best, most talented people who have many choices and want to work for something which matters. Mission-driven founders seem to commit a little more to their startups because they are giving their heart, not just their brain to the effort. Mission-driven founders build strong cultures.

“How” and “What” can be logically derived. “Why” needs to be felt. And just like funk, it can’t be faked.

If you are a founder who knows Why and you’re working in the Bottom Up Economy helping SMBs, developers and consumers drive economic growth, Homebrew would be honored to hear from you.

If you’re a superstar working for a CEO who you think can’t answer the Why, we’re happy to try and find you a new home because, hey, why not? šŸ™‚

I Don’t Want to Meet Your Company at Demo Day

As a new seed fund you might imagine Homebrew hustles to incubator demo days, taking notes and then chasing down founders to make an in-person connection. Nope. If you see me at a demo day, it’s likely to show support for the incubator itself, not to discover the Next Big Thing. Why? Because if I’m meeting a founding team for the first time on demo day I messed up. Given Homebrew’s commitment to go ā€œall inā€ for our founders (leading financing rounds, operational guidance) and our fund’s thematic focus (the Bottom Up Economy), if I’m doing my job we’ll have found one another earlier, even if fundraising activity hasn’t begun.

It’s not because I want a sneak peek, or to try and pressure you into taking money before you have the chance to make a market. Rather I’m hoping we can see how each other work, maybe even work together by hopping off a whiteboard to talk through a design issue, product strategy or distribution hack you’ve been struggling to solve. I’m more interested in the way you think, communicate and lead, than your Keynote pitch skills. A termsheet should be just another milestone within a long relationship. When you talk with Homebrew, we don’t act one way before we wire you money and different afterwards.

Some founders (or incubator founders) will read this and raise an eyebrow, assuming there’s a hidden agenda on our part, or that there’s signaling risk in talking with investors in a staggered fashion. Maybe insisting that the unveiling of a company and subsequent funding auction yields the highest valuation. I realize that in aggregate some of these statements may be true (well, not the hidden agenda part). Thankfully we don’t want to invest in the aggregate company. And we have no problem being part of competitive/collaborative fundraising efforts. You want to kick off your raise on demo day and close quickly to create urgency? No problem, we’re excited to support that but the probability of our participation increases dramatically if we’ve had the chance to see you develop as a company and know that you too have had the opportunity to get to know us.

Making 10 or fewer investments each year gives us the ability to look for opportunities where there’s great culture fit between Homebrew and founders. Deal terms matter but people matter even more. We want to work furiously to help mission-driven founders build the companies they imagine. Ones that last a long time.

Aside from our model and ambitions, I’d suggest that if you’re in an incubator, early on identify a handful of funds that you want to get to know better. Funds that are likely to lead or otherwise participate in your seed round. Express that interest and spend some time together before you hit the stage with your ā€˜up and to the right’ graph. At the end of the day do this not because it’s what investors may want but because it will help inform your decisions.

So see you at demo day, but it’ll be sitting in the first few rows giving you a thumbs up for the progress you’ve made, not leaning over to the person next to us asking ā€œwhat was that company’s name again?ā€

The Seed+ vs Pre-A Round Financing

Our venture fund Homebrew is focused on seed stage because that’s where we can be of most value to entrepreneurs by going “all in” for them early: leading a round, bringing on other great investors, putting together a board and helping them build the product/company/culture they imagine. Since we launched in May, there have also been a surprising number of what I’d call “special opportunities” – namely, companies which have raised a seed within the last two years looking to replenish their coffers without doing a full next round.

You write your principles in pen and your business plan in pencil, so we’re definitely taking a look at these, although we haven’t invested in any yet (all our commitments to date have been in true seed rounds). As we review them there are clearly two different scenarios, one of which is way more attractive than the other:

One I’d call the Seed+ — that means the team hasn’t yet hit the milestones they hoped to accomplish with the capital from their seed financing and need funding to continue. The reasons for the miss are varied – market developed more slowly, distribution took longer, team struggled to hire or hit their stride. Seed+ rounds seem to be priced at the same terms of seed (obviously dilutive), or slightly improved terms recognizing progress team has made. When evaluating Seed+ we ask the following:

  • Current investors: are they still supportive? are any putting more money in?
  • Team: how is morale? are founders still confident, or has the slog started to take its toll? Have they lost any key team members?
  • Deal: are founders properly assessing the value created to date, or lack there of?
  • Why?: Why are they running out of money? If it was an external event they couldn’t control, are they now executing as expected? If it was internal to the company has the issue been resolved?

Sometimes founders/current investors will tell us it’s worth bridging because it’s a small technical team and they can probably soft land if this doesn’t work out. That’s not of interest to us – in fact, probably a negative signal. As venture investors we’re not looking to say “let’s put a little more money in on this seed+ and likely outcome is they sell to Yahoo and we get our money back.” We need teams that still have the conviction they’ll build a company of merit and value.

If it’s not a Seed+ plus then it’s what I’d call a Pre-A. These startups have enough momentum to likely raise an A round at reasonable terms but are betting if they hit just a few more milestones, they’ll be in a position of even greater leverage. These are sexy as hell because not only is it a company heading in the right direction but a team that believes in itself enough to make a thoughtful, somewhat non-traditional decision. Many times Pre-A rounds will be taken fully by current investors but founders may want to bring in a new party as another pair of helping hands. Even better if, like Homebrew, they’re a seed institution that is likely to follow on in the A round.Ā Pre-As are usually structured as a convertible, with a cap and/or discount to the A round.

Hopefully this helps entrepreneurs who are approaching their next funding decision. If you have any questions or want to discuss Homebrew investing, you can email me hunter at homebrew dot co.

“You Literally Represent Everything Wrong With The World”

Over the past 48 hours, movie enthusiasts stormed my front door with pitchforks, demanding my head. I responded to the first 100 comments to my post about rethinking the movie theater experience, but was then overwhelmed by another 300, not to mention the tweets. So. many. tweets. To catch folks up:

  • On Saturday I jotted a quick blog post about how for some movies, I’d love a theater experience that was separate from the traditional viewing experience and catered to people who wanted to talk, multitask, use the internet while watching.
  • I expected a few “awesomes” and a few “horribles” from the people who normally read my blog. Instead it got picked up by several sites and RTed with commentary by some film lovers and creative professionals. The result was 20k+ pageviews and strong feelings that were pretty unexpected in their intensity. I received a number of private messages – from friends, strangers and industry executives – in support but clearly those were dwarfed.
  • There were three categories of commentary, which I’ll summarize below as part of trying to understand the reaction.

1. This Shouldn’t Exist, You’ll Ruin My Movie Experience

To be honest, two days later, I still don’t understand this comment. I’m suggesting a separate theater within a multiplex that has an alternative viewing atmosphere for certain types of movies. If anything, this would get the rude people out of your theater and into mine. The traditional viewing experience – dark theater, no cell phone, no talking, no getting up in the middle of the movie, etc – I agree with that. I think I’d watch the majority of my movies that way too. So I don’t understand how a different, opt-in experiment ruins your experience. My best guess is that it became a flashpoint for frustration with behaviors people currently experience when they go to the movies, assuming I was the type of person who thinks it’s ok for me to do whatever I want in a theater.

Some folks made secondary arguments: that permitting this in some theaters would create new social norms in the existing ones. That it would be one less theater screen to exhibit films the traditional way despite there being thousands and thousands of screens already. Those are pretty nuanced assumptions.

Other folks told me to stay home and watch by myself where I can fully control the environment. The rise in home systems suggests this is a very popular option but it’s not a substitute for (a) first run movies that are (b) watched in a theater setting with a (c) critical mass of people. There’s a social, communal event that I still desire, not just to bend the way the world works to my will.

2. You Are Disrespectful to the Movie Industry

Let me start with a statement: I love movies and greatly value the creative professionals who work on them. I subscribed to Film Threat as a kid, am not embarrassed to go to the theater by myself, and frequently support film projects on Kickstarter (eg: Graffiti Rock, Dungeons & Dragons: A Documentary).

So what happened – why did this post become about my hatred of movies instead my love of them? Two reasons:

  1. My post crossed over to an audience that doesn’t know me
  2. I wrote too glibly and put a portion of my foot in my mouth

First, the crossover. As I said in the intro, I expected my normal blog readership to weigh in and tell me whether this was a good idea. These folks mostly have context for who I am beyond this single post. If they think I’m wrong, they tell me, but generally don’t consider me the antichrist. However with social media, you can sometimes crossover to an audience unfamiliar with you. On Twitter, there was almost no mention of my post from the 500+ people I follow, but my @ tab was filled with people I didn’t know, wishing horrible things would befall me. On the internet, a statement becomes contextless, curated and summarized. So to thousands of people I became “an asshole investor taking a dump on the altar of film.”

With regards to the glibness – I didn’t make clear that I value the creative and physical sweat of making movies. And my very suggestion – one which I still stand by (more on that at the bottom) – broke movies into two classes of films: those ‘worth’ paying attention to and those ‘not worthy’ of my full attention. Some folks assumed that I would want to multitask during their favorite films – Chinatown being one example (saw it, loved it, would not want to watch it in a social theater). So I wish I was more clear about respecting the medium.

That said, I’ve always felt voting with your wallet is the best way to support the creative arts. Get painters, musicians, actors, filmmakers, etc PAID. My sentiment was “boy there are some films that I don’t watch today, which I’d love to pay for if they gave me a different way to view them.” I saw it no different than the windowing choice consumers make on theatrical vs VOD vs cable etc. Especially given the tentpole, highly commercial movies I was using as examples – with merch tie-ins, etc – I don’t think you can separate art + commerce.

3. You Literally Represent Everything Wrong With The World

Both with and without proper context my idea became a lightning rod for three larger issues:

  • Arts Being Commercialized: Sequels, 3D, tentpole movies, declining theater audience in the US, Spielberg/Lucas predicting the ‘implosion‘ of the movie industry — my experimental suggestion was another hack at an institution many people value and hold dear.
  • Attention Spans Shortening, Technology Controlling Our Lives: “If you can’t pay attention for two hours I feel sorry for you” – I heard this a lot. I’ve experimented with different types of attention modification, even going to a week long silent meditation retreat. For many the movie theater is a sanctuary where they can withdraw from connectivity and immerse themselves in an alternate reality. My suggestion was a pin to that bubble.
  • Technology Community Wants The World to Cater to Them: Especially in the posts which emphasized I am a Venture Capitalist, this was indicative of asshole techies being at best, out of touch with the rest of the world, and at worst, making the world more exclusionary. Not my intent. I believe the tech community actually needs to often get its head out of its ass and realize there are some things we think are problems that aren’t generally considered by others to be priorities.

I don’t expect this follow-up post to be read by nearly the # of people who read the original but the resulting reaction caused me to pause and consider my words. I’m sure some will still say “you just wrote another 1,000 words proving you’re an asshole.” So be it.

As for my idea about a separate, social, connected viewing experience – maybe something which feels like the modern day equivalent of the participatory midnight movie Rocky Horror showing – I still want to try it out. Maybe I’ll hate it. Maybe enough people won’t like it to make it commercially viable, but I’m really interested. So I’m looking for a place in San Francisco. Maybe sell tickets as a charitable donation to a film preservation society or digital divide organization like Ghetto Film School. Like most experiments, you don’t know until you try…..

Reinvent the Movie Theater: wifi, outlets, low lights, second screen experience

Update 8/5: Wrote a response to the unexpected interest & negativity to my proposal

Update 8/8: Thanks to actor Elijah Wood for explaining why he disagrees with this idea; also to Anil Dash who takes a broader look at the feedback this post has received in the context of cultural norms.

Update 8/10: Thanks to @mike_ftw for hosting an extended chat on his podcast Let’s Make Mistakes.Ā 

In my 20s I went to a lot of movies. Now, not so much. Over the past two years becoming a parent has been the main cause but really my lack of interest in the theater experience started way before that. Some people dislike going to the movies because of price or crowds, but for me it was more of a lifestyle decision. Increasingly I wanted my media experiences plugged in and with the ability to multitask. Look up the cast list online, tweet out a comment, talk to others while watching or just work on something else while Superman played in the background. Of course these activities are discouraged and/or impossible in a movie theater.

But why? Instead of driving people like me away from the theater, why not just segregate us into environments which meet our needs. I’d love to watch Pacific Rim in a theater with a bit more light, wifi, electricity outlets and a second screen experience. Don’t tell me I’d miss major plot points while scrolling on my ipad – it’s a movie about robots vs monsters. I can follow along just fine.

If you took a theater or two in a multiplex and showed the types of films which lend themselves to this experience I bet you’d sell tickets. Maybe even improve attendance during the day since I could bang out emails with a 50 foot screen in front of me. My epic out of office message could read “away from desk – watching Iron Man 3.”

Deciding Whether to Leave Google/Apple/Facebook? Here’s the One Question to Ask Yourself.

Having spent 9+ years at Google/YouTube before leaving to raise our Homebrew seed fund, I know a little bit about ‘golden handcuffs.’ And the truth is, if you’re a high performer focused on maximizing wealth, you’d be unlikely to ever quit Google, Facebook, Apple, etc (unless you want to roll the dice and found a company. side note: if you do, pls email me). Even if you prize intellectual challenge in addition to your handsome paycheck, these companies (decide if you want to add Twitter, Amazon, etc to the mix) will always have a new opportunity for you which magically appears just as you’re about to quit. “Oh, before you accept that job at Square, how’d you like to work on Google X?” I see this happen all the time – a valued employee prepares to leave and a very attractive comp bump and/or new role makes it easy for them to stay.

BUT WAIT, there’s one question to ask yourself periodically, especially when considering a new assignment over an external opportunity, and that question is:

Imagine you were at a different job you loved and a recruiter from [Google/Apple/Facebook] called you to offer you your current job at [Google/Apple/Facebook], would you chase it? Or in other words, would you re-apply today for the job you currently have?

It’s a rather simplistic question but one which I believe gets to the heart of whether you’re just comfortable, well-compensated, doing something familiar or really pursuing something personally meaningful. The reality is, there’s nothing wrong with not leaving, just don’t play this game with yourself or other companies about “ooh maybe I want to leave, maybe I don’t.”

But if you do answer “no, I wouldn’t fight hard for the job I have” then you owe it to yourself to find something that you can be excited about. This was one of the fundamental questions I asked myself when leaving Google/YouTube. There were several other really compelling opportunities being presented to me within the company and that vesting schedule was nice, but it would have meant professional cardiac arrest. No heartbeat. Not passionate. And I needed to create something that got me pumping 200 bpm.

For an Operator, Becoming a VC Isn’t the “Best of Both Worlds”

“Wow, that’s like best of both worlds for you. Investing other people’s money and getting to work on a bunch of cool products.” I heard this pretty often as I started to tell friends and former co-workers about Homebrew, our seed stage venture fund. While our experience and passion around product design will hopefully be a major reason entrepreneurs want to work with us, “best of both worlds” isn’t just the wrong way to look at becoming a VC, it’s actually harmful for both the investor and entrepreneur. The entrepreneur should be building the company they want to see exist and the investor should be assessing the entrepreneur’s capability to do so.

My first year of angel investing I fell into classic “operator turned investor” traps. During pitches I’d get excited about a company because I could imagine how I’d go about solving the problem identified or the product described. Instead I should have focused on the founder’s understanding of the problem and how they were going to solve it.Ā Many times when working with a team my advice would often sound like “well here’s how I would do it…” That’s fine but only a B+ answer. What’s way more valuable is to understand the capabilities of the team, help them establish the framework within which to make a decision and then guide them towards execution. As I spent several more years investing and advising I was able to self-correct these tendencies and become more valuable to companies.

With Homebrew I knew I was making a distinct choice to become a product-centric investor, not a player-coach. My goal is to invest in strong exceptional teams who have the ability to succeed on their own, and help them increase the probability, scale and velocity of that success. And we intend to do that via our own time, a strong group of entrepreneur advisors, the right co-investors, the broader Homebrew community and a set of other ideas we’re still, uh, brewing.

I’m a tremendous believer in the value of operators turned professional investors (duh) but it’s perfectly legit for a founder to ask these investors “I respect what you were able to build but help me understand how you intend to translate that experience into helping me build the company, the product, the team and the culture that I want to build.” The best answers will be centered on growing your capabilities, not touting theirs.

Posted in VC | Tagged 1

Wanted: Crowdsourced List of Celebs & Their Official Social Media Accounts

Here’s what I want: a simple way to look up any celebrity/politician/athlete/public figure and see which social media sites they have accounts on with links to their official accounts. I want to be able to meta-follow a celebrity via this site to be alerted when they create a new account (eg “Rihanna just joined Vine at acct <link>”). And I’d like to see in the listing their last publish date for the site in order to tell whether they are active.

Pretty sure you could crowdsource this list via superfans. If not as a standalone site, it would be a good addition to IMDB or Wikipedia. I’d prefer it to not be part of TMZ, etc because those pages are so heavy with images, ads and bulky site templates.

Does this exist yet? Why not?